Second Circuit Holds FDCPA Claim Accrued on Date Plaintiff’s Bank Account Was Improperly Frozen, Not on Date Plaintiff Had Notice of the Violation

The United States Court of Appeals for the Second Circuit recently held that a claim brought under the Fair Debt Collection Practices Act (“FDCPA”) accrued on the date the debt collector froze the wrong person’s bank account, not the date the person had “notice” of the violation.  See Benzemann v. Houslanger & Assocs., PLLC, 2019 WL 2079006 (2d Cir. May 13, 2019).  In 2008, the defendant debt collector sent a restraining notice to a bank regarding a judgment against an individual named Andrew Benzemann (the “Debtor”).  However, defendant provided plaintiff Alexander Benzemann’s (“Plaintiff”) address and social security number.  The bank froze Plaintiff’s account.  Upon realizing what happened, Plaintiff’s attorney contacted defendant and notified him about the error, and defendant had the freeze lifted.  On December 6, 2011, defendant mailed another restraining notice making the exact same mistake to the same bank, and the bank again froze Plaintiff’s account.  Plaintiff realized his account was frozen on December 13, 2011, and contacted his attorney.  On December 14, Plaintiff learned that the account was frozen again due to defendant’s mistake.  On December 14, 2012, Plaintiff filed this action under the FDCPA.  The District Court initially found that Plaintiff filed the action outside the one-year statute of limitations because the claim accrued on December 6—the date defendant mailed the incorrect notice.  However, the Second Circuit reversed in 2015, holding that the FDCPA violation occurred whenever the bank froze the account “because it was only then that [Plaintiff] had a complete cause of action and notice of the FDCPA violation,” and remanded the action for discovery on when the bank froze the account.  After discovery, it was confirmed that the bank froze the account on December 13, 2011.  Thus, the District Court granted the defendant’s summary judgment motion because the claim was untimely.

On appeal, the Second Circuit affirmed.  Plaintiff argued that the Second Circuit’s language in the prior decision—that a violation does not occur until Plaintiff “had a complete cause of action and notice of the FDCPA violation”—meant that the limitations period did not begin running until Plaintiff discovered the improper restraining notice, i.e., December 14, 2011. (emphasis added).  The Court disagreed and stated that Plaintiff was taking that quotation out of context.  Instead, the Court stated that its prior decision held only that the FDCPA claim accrues when the injury occurs, and “Plaintiff’s knowledge—or lack thereof—is irrelevant in determining when an alleged FDCPA violation occurs.”  Further, the Court found that the FDCPA statute itself is clear that a plaintiff must bring claims “within one year from the date on which the violation occurs.”  See 15 U.S.C. § 1692k(d).  The Court also rejected Plaintiff’s claim that the action was timely under the “discovery rule.”  The Court left open the question of whether the discovery rule applies in FDCPA actions, finding instead that Plaintiff discovered his account was frozen on December 13, so it would be barred even if the discovery rule applied.  Finally, the Court found that equitable tolling also does not apply because there was no evidence Plaintiff acted diligently in bringing this action once he discovered the violation.

For a copy of the decision, please contact Michael O’Donnell at, Michael Crowley at, or Dylan Goetsch at